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Thread: No Sponsors at Olympics
08-12-2012, 11:59 AM #1
No Sponsors at Olympics
i understand that the Olympics do not show any sponsor advertisement board at the matches.
but the Olympics is still so profitable. How come?
08-12-2012, 12:17 PM #2
The main source of their income is obviously TV rights, especially the billions from NBC. Not allowing court side advertising will maximize the TV advertising value for the TV rights holders. That's how they get sponsor money.
08-12-2012, 08:59 PM #3
08-13-2012, 02:02 AM #4
It's true for the host country but such ill-fated fortune is untrue for IOC
check this one "Do the Olympics cost too much for host cities?"
Last edited by kelana; 08-13-2012 at 02:06 AM.
08-13-2012, 08:52 AM #5
It is interesting you separate them, personally I would not qualify an Olympics to be profitable unless it covered all the cost taken to host it.
Either way the Olympics are not profitable, generate massive revenues yes but nobody is walking away with profit.
08-13-2012, 11:05 AM #6
IOC is sharing the profits but not the losses!
Read again carefully my line above "It's true for the host country but such ill-fated fortune is untrue for IOC"
IOC is sharing the profits but not the losses!!
The legal architecture of the Games
The IOC is the supreme authority of the Olympic Movement, responsible among other things for promoting Olympism worldwide and ensuring the regular celebration of Olympic Games. The Games are the IOC’s exclusive property; they own “all rights and data relating thereto, in particular, and without limitation, all rights relating to their organisation, exploitation, broadcasting, recording, representation, reproduction, access and dissemination in any form and by any means or mechanism whatsoever, whether now existing or developed in the future”. This includes control over all the “Olympic properties”: the Olympic symbol, the flag, the motto, the anthem, the emblems, the flame, the torches, and so on. The exploitation of these rights and properties allowed the IOC – a not-for-profit international non-governmental organisationwith circa 300 employees – to make an estimated $2,300 million between 2001 and 2004 and a profit of $383 million on the Beijing 2008 Summer Olympics alone. Based in Lausanne, the IOC is not subject to income or wealth tax by virtue of an agreement with the Swiss Government.First measure of exception: the abolition of the distinction between legislative, executive and judicial powers.
When London won the right to organise the 2012 Olympics in July 2005, the city signed the Host City Contract with the IOC. Following the agreement, a limited company, the London Organising Committee of the Olympic and Paralympic Games (LOCOG), was established in order to organise the Games with “maximum benefit and efficiency”. Shortly after, the London Olympic and Paralympic Games Act 2006 (LOPGA) was passed. Among other things, the Act established the creation of a public body responsible for building the infrastructures needed for the Games, the Olympic Delivery Agency (ODA).
The ODA has extraordinarily wide-ranging powers: the capacity to design and implement urban plans, the development of the sporting and transport infrastructure, the control of the advertising space and street trading licences around Olympic venues, and the power to investigate and prosecute breaches of Olympic brand related rights. As James and Osborn have observed: “No other public body combines the functions of a local council, planning authority, transport executive, trading standards office and police service, yet the ODA has been granted powers similar to those exercised by each of these bodies.”
According to the Host City Contract, any profit resulting from the organisation of the Games is to be divided between the British Olympic Association (20%), the promotion of sport in the host country (60%) and the IOC (20%). Were there to be losses, however, the public bodies are liable.
 In addition, all payments made by or to the IOC regarding revenues generated in relation to the Games are tax-exempt. Article 49 establishes that the city and/or LOCOG “shall bear all taxes, including direct and indirect taxes, whether they be withholding taxes, customs duties, value added taxes or any other indirect taxes, whether present or future, due in any jurisdiction”. The amounts involved are not insignificant.
LOCOG’s budget, self-funded by ticket sales, a percentage of the IOC’s revenue, and its own exploitation of the Olympic brand, is £2,000 million; meanwhile, the ODA’s budget, 98.2% public-funded, is £9,325 million. In other words, £9 billion of public funds have been allocated to set the scene for a £2 billion privately owned and tax-free event, whose owner is also rendered non-liable for any hypothetical losses.
These exceptionally generous fiscal conditions secured by the IOC rest on the generation of substantial surplus value in the first place. In relation to this, the city has to obtain “control over all city advertising opportunities: airport, train, bus, and other transport advertising, as well as billboard advertising” for the period of the Games and the previous month, and hand it over to the official sponsors. Most of the Olympic revenue comes from exclusive broadcasting (47%) and sponsorships (45%) contracts. The IOC oversees all broadcasting contracts and the worldwide “The Olympic Partners” (TOP) sponsorship programme, while allowing local organising committees to manage ticket sales and sign local sponsorship deals. These contracts exploit the value of the exclusive association with the Olympic brand, which is the reason why the latter must be “adequately and permanently” protected.
In the case of London 2012, this protection is granted by the Olympic Symbol etc. (Protection) Act 1995 and the LOPGA 2006, cited above. As Julian Walker explains in more detail in this volume [The Art of Dissent ], words such as “Olympiad”, “Olympian”, “Olympic”, “Summer”, “2012”, “Twenty-Twelve” or “Gold”, as well as all the iconography associated with the London Games, have their use restricted to official sponsors. In fact, “any representation (of any kind) in a manner likely to suggest to the public that there is an association between the London Olympics and (a) goods or services, or (b) a person who provides goods or services” will be deemed an instance of “ambush marketing” and hence subject to legal and police action:
08-13-2012, 06:59 PM #7
Profitable can be a tricky concept.
In addition to the example of IOC given above, the Olympics is massive income redistribution process in which many people profited handsomely at the expense of tax payers of the host city and/or country.
To be fair, some civic infrastructures would have never been built if not for hosting the Olympics and the host city infuses its name into the consciousness of people around the world.
craigandy liked this post
08-14-2012, 01:27 PM #8
The 'Recession-Proof' Olympic Dream
Just stumbled upon an interesting article about the money making Olympic Games for IOC.
From humble, if occasionally oddball, beginnings, the Olympics have become a very large business indeed. Much of the most dramatic growth has come in the last 20 years. We’ve included a broad range of data about the games in the tables after this note, but here is a highlight reel:
- Revenue reporting from the International Olympic Committee (IOC) goes in four year cycles, and also all its revenue comes from “Marketing” – essentially the sale of broadcast rights and marketing partnerships. For the 2009-2012 period, “Broadcast” revenues are $3.9 billion and “TOP Programme” (sponsorship deals) are $957 million. That’s a total of $4.9 billion over 4 years, or a 7% compounded annual growth rate from the 1993-1996 revenue cycle, which netted only $1.5 billion in Broadcast and TOP Programme inflows.
- Large corporate sponsors – think Coca-Cola, McDonalds, Visa and Samsung – are shelling out $957 million for the London Games cycle, up from just $96 million for the 1985-1988 Olympic cycle of Calgary (winter) and Seoul (summer) games.
- Broadcast revenues to the IOC from the last games in Beijing were $1.8 billion, the amount that global broadcasters paid for the rights to air the games in their individual countries. The 2012 London numbers are not yet available, but they will certainly top $2.0 billion, and the growth rates for this line item are simply staggering. Consider that the global broadcast revenues for the 1960 Rome games (pre Telstar, the first satellite to allow for live transmissions between the US and Europe) was just $1.2 million. The 1988 Los Angeles Olympics cost the worlds’ broadcasters a total of $287 million. The games in Sydney (2000) broke the $1 billion mark, and London will likely do the same for the $2 billion barrier.
- The U.S. media market is the largest single driver of these increases. Since the 1998-2000 period, spending on broadcast rights for the North American market have increased from $1.1 billion to $2.2 billion, an increase of $1.1 billion. For the rest of the world – essentially the other 219 countries that show the games - the increase has been just shy of $1.0 billion.
- Where does all this money go? The answer is not clear. The IOC’s website shows that 90% of their revenues go to National Olympic Committees (NOCs), International Olympic Sports Federations (Ifs), and “Other Organizations” dedicated to the Paralympics and anti-doping agencies. Budget data from the London Olympic organizers shows that they will receive 700 British pounds ($1.1 billion) from the IOC as their share of the television and sponsor proceeds. As I noted above, revenues from the current Olympic cycle are close to $5 billion, even before you include ancillary items such as ticket sales. There’s the IOC contribution to the 2010 Vancouver games to consider in the math, but the winter games are much smaller in cost and scope than the summer offering.
The Olympics is therefore an unequivocal business success story, unharmed by global recession, sovereign debt woes, and the other economic problems of the moment. But why? A few thoughts to close out this note:
- Broadcasters and advertisers in developed economies have to constantly address the increased fragmentation of their target audience, namely consumers of content and product. The Olympics are a one-stop-shop where all the challenges of online media/live TV/DVR fade into the background. Viewers watch events largely in real-time or a few hour delay, and there’s only one source for the content. In the U.S., this is NBC.
- In emerging markets such as China, India, and parts of Africa, the Olympics give international brands a chance to reach consumers very efficiently. How else can you show 4 billion people your logo without having to address the vagaries of each local market?
- In the ongoing debate about the value of “Content” versus “distribution,” the Olympics settle the argument in favor of the former. Yes, the Internet and mobile advertising and social media and scores of other offerings make the job of marketers and advertisers that much more difficult. But when you have globally relevant content, all those challenges fall by the wayside.